Stocks? Should Have Bought Breakfast!

Breakfast is said to be the most important meal of the day. Thus far in 2013
breakfast has been not only that, but one of the better investments. The oats
in that bowl of hardy cereal, as shown in the chart below, have been a star
performer. Those lowly oats have risen in price significantly more than the
stock market. Eggs and the butter that goes on the toast also did better. Forget
tired tech and bumbling banks, buying breakfast instead for 2013 has been the
right move.

Great balls of cotton! How did cotton come to be in second place, far outpacing
the stock market? Seems prices were so bad last year that farmers around the
world would rather not plant the stuff. As a consequence, world cotton prices
have risen by nearly 30% since the Fall low. Demand for cotton around the world
has some renewed strength. Appears China missed out on that nasty recession
all the gurus had forecast to happen, and the economy in that nation is strengthening.
Along with demand for many commodities, Chinese purchases of cotton are recovering.
U.S. exports this year, as just one example, will be down slightly from last
year, but still be the third highest on record per the USDA. Exports from U.S.
to China in December were up 90%.

2013 is to be a year of rotation in Agri-Commodities. In Agri-Food strong
prices encourage production and weak prices discourage production. Over priced
U.S. corn is encouraging farmers, all around the world, to plant as much acreage
as possible in corn. At the same time former cotton producers are turning to
soybeans and other crops. Such is the way it works in Agri-Foods.

This rotation does have implications for Agri-Investors. For example, farmers
around the world will have good cash flow again in 2013. Part of that will
be due to the quite natural rotation of Agri-Commodity prices. Deere and AGCO
will gladly sell tractors to farmers regardless of the crop to be planted.

As the above chart portrays, the first tier Agri-Equities have done well.
They recently again reached a new high. We are by our nature nervous when stocks
have had such a strong run as that pictured in the graph. That admission aside,
the prospects for strong Agri-Commodity prices in the years ahead make the
fundamentals of these companies some of the best to be found in the equity
market.

While the rotation in Agri-Commodity prices now developing is positive for
Agri-Equities, it has negative implications for poorly constructed Agri-Commodity
investments. Most Agri-Commodity indices and ETFs are over weighted in corn
and wheat while under weighted in those used widely in Asia. They tend to be
under weighted or void of exposure to palm oil, rice, and cotton. We would
avoid all of the diversified Agri-Commodity ETFs this year.

Our excitement is high as AgriMoney: Wealth Creation
Through Agri-Food Investments is now available for investors. The
book investors have been asking about for some tine is now a reality. AgriMoney is
now the primary educational resource for Agri-Investors, new or experienced.
See our web site.

Ned W. Schmidt,CFA is publisher of The
Agri-Food Value View, a monthly exploration of the Agri-Food grand
cycle being created by China, India, and Agri-Energy. To contract Ned or
to learn more, use this link: www.agrifoodvalueview.com

Ned W. Schmidt,CFA,CEBS is publisher of THE VALUE VIEW GOLD REPORT and
author of "$1,265 GOLD", published in 2003. A weekly message, TRADING
THOUGHTS, is also available to electronic subscribers. You can obtain
a copy of the last issue of THE VALUE VIEW GOLD REPORT at The
Value View Gold Report. Ned welcomes your comments and questions, and
tries to answer most all. His mission in life is to rescue investors from
the abyss of financial assets and the coming collapse of the U.S. dollar.
He can be contacted at ned@valueviewgoldreport.com